Pioneer Hi-Bred Intern. v. Ottawa Plant Food, Inc.

• Decision Date: 29 September 2003
• Docket Number: No. C 98-4016-MWB.,C 98-4016-MWB.
• Citation: Pioneer Hi-Bred Intern. v. Ottawa Plant Food, Inc., 283 F.Supp.2d 1018 (N.D. Iowa 2003)
• Parties: PIONEER HI-BRED INTERNATIONAL, INC., Plaintiff, v. OTTAWA PLANT FOOD, INC., Defendant.
• Court: U.S. District Court — Northern District of Iowa

283 F.Supp.2d 1018

PIONEER HI-BRED INTERNATIONAL, INC., Plaintiff, v.OTTAWA PLANT FOOD, INC., Defendant.

No. C 98-4016-MWB.

United States District Court, N.D. Iowa, Western Division.

September 29, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Christine Lebron-Dykeman, Edmund J. Sease, Heidi Sease Nebel, Jeffrey D. Harty, R. Scott Johnson, McKee, Voorhees & Sease, PLC, Daniel J. Cosgrove, Pioneer Hi-Bred International, Des Moines, IA, for Plaintiff/counter-defendant.

James W. Redmond, John C. Gray, Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl, Sioux City, IA, Keith D. Parr, Lord, Bissell & Brook, Mark R. Sargis, Bellande, Cheely, O'Flaherty, Sargis & Ayres, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT OR PARTIAL SUMMARY JUDGMENT AND THE DEFENDANT'S MOTION TO STRIKE AFFIDAVIT

BENNETT, Chief Judge.

TABLE OF CONTENTS

I. INTRODUCTION ............................................................. 1022
                   A. Procedural Background ................................................. 1022
                   B. Factual Background .................................................... 1023
                II. OTTAWA'S MOTION TO STRIKE AFFIDAVIT ..................................... 1026
                III. STANDARDS FOR SUMMARY JUDGMENT ......................................... 1029
                IV. LEGAL ANALYSIS OF SUMMARY JUDGMENT MOTIONS .............................. 1031
                       A. Issues Presented .................................................. 1031
                       B. Liability Issues .................................................. 1031
                           1. "First sale" or "patent exhaustion" ........................... 1031
                               a. Arguments of the parties .................................. 1031
                               b. Applicable law ............................................ 1032
                               c. Analysis .................................................. 1033
                           2. Restrictions in the "limited label license" ................... 1035
                               a. Arguments of the parties .................................. 1035
                               b. Applicable law ............................................ 1036
                               c. Analysis .................................................. 1038
                                   i. Interpretation of the restrictive language ............ 1038
                                  ii. Presence of the restriction on bags purchased by Ottawa .. 1040
                                 iii. Ottawa's notice ....................................... 1040
                           3. Enforceability of the label restrictions ...................... 1042
                               a. Arguments of the parties .................................. 1042
                               b. Applicable law and analysis ............................... 1043
                                   i. Permissible restrictions .............................. 1043
                                  ii. Scope of the patent rights and anticompetitive effects ... 1044
                                 iii. Contract principles ................................... 1046
                      C. Damages Issues ..................................................... 1049
                

1. Marking or notice of patent rights .......................  1049
                               a. Arguments of the parties .............................  1049
                               b. Applicable law .......................................  1050
                               c. Analysis .............................................  1051
                                       i. Notice by "marking." .........................  1051
                                       ii. Actual notice ...............................  1051
                           2. Damages for infringement .................................  1052
                               a. Arguments of the parties .............................  1052
                               b. Applicable law .......................................  1052
                               c. Analysis .............................................  1053
                           3. Full compensation from prior sale ......................... 1053
                               a. Arguments of the parties .............................. 1053
                               b. Applicable law ........................................ 1054
                               c. Analysis .............................................. 1054
                           4. Increased damages for "willful" infringement .............. 1054
                               a. Arguments of the parties .............................. 1055
                               b. Applicable law ........................................ 1056
                               c. Analysis .............................................. 1056
                V. CONCLUSION ........................................................... 1057
                

This action, which involves a claim of alleged infringement of patents for hybrid and inbred seed corn by an unlicensed reseller, comes before the court pursuant to the parties' cross-motions for summary judgment or partial summary judgment(docket nos. 174 & 175).Also before the court is the defendant's motion to strike certain paragraphs of an affidavit offered by the plaintiff as part of the summary judgment record (docket no. 187).The court heard oral arguments on the motions on September 18, 2003.At those oral arguments, plaintiff Pioneer Hi-Bred International was represented by Edmund J. Sease, Christine Lebrón-Dykeman, and R. Scott Johnson of McKee, Voorhees & Sease, P.L.C., in Des Moines, Iowa, and Daniel J. Cosgrove of Pioneer, also in Des Moines, Iowa.DefendantOttawa Plant Food, Inc., was represented by Keith D. Parr of Lord, Bissell & Brook in Chicago, Illinois, Mark R. Sargis of Bellande, Cheely, O'Flaherty, Sargis & Ayres in Chicago, Illinois, and James W. Redmond of Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl in Sioux City, Iowa.The motions are now fully submitted and some expedition in the disposition of the motions is required, as this matter is set for trial to begin on November 3, 2003.

I.INTRODUCTION

A.Procedural Background

PlaintiffPioneer Hi-Bred International, Inc., commenced this patent infringement action¹ on February 20, 1998, against eight defendants not including the present defendant, Ottawa Plant Food, Inc., alleging that each of the defendants, none of whom were authorized Pioneer Sales Representatives, had illegally sold or offered for sale Pioneer® brand seed corn.See Complaint.Ottawa was added as a defendant when Pioneer filed an Amended Complaint on September 11, 1998(docket no. 80), apparently after Pioneer learned, through discovery, that Ottawa had acquired Pioneer® brand seed corn from one of the original defendants, Farm Advantage, Inc.The claims against all other defendants have since been settled, so that this litigation is continuing only between Pioneer and Ottawa.Pioneer's specific claim against Ottawa, pursuant to 35 U.S.C. § 271, is that Ottawa is not an authorized Pioneer Sales Representative, but that it has nevertheless, for some time past, and still is, infringing one or more of numerous patents-in-suit for Pioneer® brand hybrid and inbred seed corn by making, using, selling, or offering for sale Pioneer® brand seed corn, and will continue to do so unless enjoined by the court.SeeAmended Complaint, ¶16.Pioneer seeks injunctive relief, an accounting for damages, including damages for willful infringement, and assessments for interest and costs.Id. at Prayer.Ottawa answered the Amended Complaint on November 3, 1998(docket no. 104), denying Pioneer's claim and asserting affirmative defenses of patent exhaustion, laches, waiver, and estoppel.²

Presently before the court are the parties' cross-motions for summary judgment or partial summary judgment filed July 22, 2003.More specifically, on July 22, 2003, Ottawa filed its Motions For Summary Judgment Of Noninfringement And No Damages (docket no. 174) on seven specific issues relating to liability and damages, which would be fully dispositive of this case if granted.³Also on July 22, 2003, Pioneer filed its Motion For Partial Summary Judgment Re: Infringement And Enforceability Of Pioneer's Limited Label License And Re: Ottawa's Affirmative Defense Under The Doctrine Of Patent Exhaustion (docket no. 175), which would be dispositive of liability issues, if granted, but leave damages issues for trial.Pioneer resisted Ottawa's motion for summary judgment on August 15, 2003(docket no. 192), and Ottawa filed a reply on August 27, 2003(docket no. 204).Ottawa resisted Pioneer's motion for partial summary judgment on August 12, 2003(docket no. 190), and Pioneer filed a reply in further support of its motion on August 26, 2003(docket no. 201).In addition to these dispositive motions, the matters now before the court include Ottawa's August 12, 2003, Motion To Strike Certain Paragraphs Of Bruce Hall's Affidavit, which is offered by Pioneer as part of the summary judgment record (docket no. 187).Pioneer resisted the motion to strike on August 29, 2003(docket no. 205), and Ottawa filed a reply on September 8, 2003(docket no. 207).

B.Factual Background

Whether or not a party is entitled to summary judgment ordinarily turns on whether or not there are genuine issues of material fact for trial.See, e.g., Quick v. Donaldson Co.,90 F.3d 1372, 1376-77(8th Cir.1996).Nevertheless, the court will not attempt here a comprehensive review of the undisputed and disputed facts in the record.Rather, the court will present here only sufficient factual background to put in context the parties' arguments for and against the motions for summary judgment on Pioneer's patent infringement claim.More attention will be given to specific factual disputes, where necessary, in the court's legal analysis, below.

Plaintiff Pioneer, an Iowa corporation with its principal place of business in Des Moines, Iowa, is the world's largest producer of seed corn.Pioneer has developed and sells a wide range of hybrid and inbred seed corn varieties subject to one or more of the numerous patents-in-suit.Pioneer sells its seed through a "dual" distribution system, using licensed sales...